Four ways to prevent foreign trade disputes and reduce contract risks

Wang Fang, deputy secretary-general of the Mediation Center of The China International Chamber of Commerce, said at a seminar on ways to Prevent disputes among foreign trade enterprises under the current situation that China has entered a stage of high-quality development, with advantages and conditions for development in many aspects, while the problem of unbalanced and inadequate development remains outstanding. We need to have a deep understanding of the new characteristics and requirements brought about by the development and changes of China's principal social contradictions, enhance our awareness of opportunities and risks, grasp the law of development, seize opportunities, respond to challenges, and seek advantages and avoid disadvantages.

"It is crucial for foreign trade enterprises to conclude contracts to prevent disputes." Wang Fang introduced the following four points for attention in the contract signing process to help enterprises avoid risks.

Above all, the enterprise should strive for the draft of contract text. When the buyer and the seller reach an agreement on the terms of the transaction after frequent negotiations, correspondence and E-mail, it will enter into the contract signing stage, there is the question of who drafted the contract. Generally speaking, it is easy for the person who drafts the contract to take the initiative. For there is a process by which the content of an oral negotiation is formed into words, sometimes only a single word apart, and the meaning is very different. In the process of writing the contract, the party drafting the contract may, according to the contents negotiated by both parties, seriously consider each clause written into the contract, choose the wording that is favorable to it, arrange the order of the clauses or interpret the relevant clauses. And even if the other party carefully considered the terms of the contract, but because of cultural differences, the meaning of the word will be different, it is difficult to avoid loopholes. So should pay attention to the draft of the contract text, try to draft the contract text. If this is not possible, work with the other party to draft the contract. There is a lot of work involved in drafting the text of a contract, which can be combined with preparation for negotiations.

Secondly, make clear the qualifications of both parties. It is very important to conduct a credit investigation to understand the other party's corporate reputation and its behavior ability and responsibility ability. In addition, do not easily believe the name card of the other side, name card cannot replace certificate. Also, when dealing with foreign companies, don't just look at the parent company's reputation and assets. In fact, the parent company is not jointly and severally liable to its subsidiaries.

Third, clearly define the obligations and responsibilities of both parties. Many contracts only stipulate the main terms of the transaction between the parties, but ignore the respective responsibilities and obligations of the parties, especially the liabilities for breach of contract. Some of the terms of a contract are very vague and general. Even if they specify the responsibilities of each party, there is no way to hold someone accountable if the terms are not clear. If the contract is ambiguous, ambiguous, in the implementation of the process, often controversial.

Finally, pay attention to the English and Chinese translation of foreign trade contracts. In China's foreign trade business, there are two versions of the contract in Chinese and English, and the two versions have the same legal effect. Generally speaking, the translation of foreign contracts should pay attention to the following three points: first, be faithful to the original text. That is to say, the translation should faithfully reproduce the meaning of the original text without any violation or omission, especially for the previous text of the contract, as well as the specific terms and term of validity of the translation should be particularly careful. To be specific, for the price terms, quantity, unit price and other important data must not be translated wrong, otherwise it is likely to cause huge economic losses due to small errors.

Second, in line with international trade practices. The parties to a contract are often not familiar with the customs of the other country, which often leads to misunderstandings, disputes and lawsuits between the parties. For this reason, some international organizations have formulated rules that have been widely used in the world, forming the general international trade practices, the most typical is the trade terms. The format, terms, words and symbols of the English version of the contract should also conform to the international trade practices of the industry, and strive to achieve the translation of the contract in accordance with the international trade practices.

Third, use normative legal language as far as possible. Since a legally formed contract is a legally binding document, practitioners who draft the contract are accustomed to using legal terms to demonstrate their accuracy and normative character. Therefore, in the process of translation, precise legal terms, terms and words should be used as far as possible to make the translation accurate and unambiguous, rigorous and without loopholes.